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Reformed Infrastructure Contributions

Reformed Infrastructure Contributions . MAV Presentation Kathy Mitchell, Chair Standard Development Contributions Advisory Committee 23 May 2014. Development Contributions. Complex, time consuming, difficult to implement, unpopular, inconsistent, contested

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Reformed Infrastructure Contributions

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  1. Reformed Infrastructure Contributions MAVPresentation Kathy Mitchell, Chair Standard Development Contributions Advisory Committee 23 May 2014

  2. Development Contributions • Complex, time consuming, difficult to implement, unpopular, inconsistent, contested • Vary markedly in Growth Areas, lack of consistency in application, lengthy debates and hearings to implement • Councils – want developers to pay more; Developers - want to pay less • In non Growth Areas, no simple and effective way to capture contributions for infrastructure required to service new development catering for growth

  3. Development Contributions • Part 3B of the Planning and Environment Act 1987 provides for the preparation of DCPs • Key principle – now and post review: • Contribution not full cost recovery

  4. Advisory Committee • Members: Kathy Mitchell (Chair), Trevor McCullough, Rodger Eade, Chris De Silva and Bryce Moore • Terms of Reference: • Advise the Minister on a system of standard levies to apply to all development scenarios • Implementation and operation of a new system • Setting and implementing standard levies for development settings and for different categories of Infrastructure • Fix the system

  5. Key Challenges and Issues • Simplicity and certainty • Ease of introduction and adaptation • Flexibility for users • Transparency • Demonstrating Need, Equity, Nexus and Accountability • Standards and adequate funding for ‘starter’ infrastructure

  6. Consultation and Reporting Process

  7. Urban Infill and Renewal Areas • Typically the contribution to public infrastructure for a development in an urban infill or renewal area is $0 • Negotiated s173 agreements for some developments • A small number of DCPs outside growth areas, e.g. • Darebin $130 to $3,600 per dwelling • Manningham (Doncaster Hill) $2,139 per dwelling

  8. Interstate Comparisons

  9. How was the Growth Area Levy Determined? • Average DCP cost (including open space and $900 per dwelling Community Infrastructure Levy) for Growth Areas: • 2008 $194,000 per net developable Ha • 2009 $215,000 per net developable Ha • 2010 $218,000 per net developable Ha • 2012 $245,000 per net developable Ha • Scope creep in boom market saw ‘blow out’ in DCP costs • Typically spent on: • Community services and open space 30% • Roads and traffic management 30% • Public land purchase 40%

  10. How was the Growth Area Levy Determined? • Showed consistency across regions • Showed ‘normalising’ of total costs over the period • Analysed variations across infrastructure categories: • Land costs higher in the south-east, although average land values had normalised in 2012 (post GFC) • Transport infrastructure costs higher in the west • ‘scope creep’ in community and recreation costs over the years • Open space levies have been inconsistently applied

  11. How was the Growth Area Levy Determined? • Identified the need to: • Achieve consistency in the application of open space costs • Limit the scope of community and recreation facilities • Provide some flexibility in the allocation of levies between land and transport infrastructure • Not leave Councils short • Not unreasonably impact on development viability

  12. How was the Growth Area Levy Determined? • Looked at: • A variable land levy • A number of options for applying Supplementary Levies Used averages over time period Verified costs through economic peer review Strategic Development Areas calculated as % of Growth Area levy

  13. Allowable Items • Provides for a specified lists for each infrastructure category rather than a broad description of ‘basic and essential’ items • No State infrastructure where GAIC applies • No public open space included in Urban Areas or Strategic Development Areas (Clause 52.01 or Subdivision Act to continue to apply) • Budget for spending on the basket of goods

  14. Commercial and Industrial Levy • Two categories selected from complex equivalence tables • Based on demand these uses generate for transport infrastructure, with minor allowance for community and recreation • Quantum informed by recent DCPs • Levies set to minimise possible distortion with non levied areas • Set at low level to encourage job creating uses • Used per square metre as base, not cost of development

  15. Thank You

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